Buffalo Co. compensates its executives with restricted stock. During 2017, the company granted 14,250 shares of $1 par value restricted common stock that will vest over ten (10) years. The market value of the shares was $9 at the time of the grant.
What is the impact of this transaction on additional paid-in capital?
A) Increase additional paid-in capital by $114,000
B) Increase additional paid-in capital by $14,250
C) Increase additional paid-in capital by $128,250
D) Increase additional paid-in capital by $40,750
E) Paid-in capital is not impacted by this transaction.

Question

Quizplus · Accepted Answer

The additional paid-in capital is increased by the difference between the market value and the par value of the shares. The market value is $9, and the par value is $1, so the difference is $8 per share. For 14,250 shares, this results in an increase of $114,000 (14,250 shares * $8).